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On Thursday, Benchmark, a financial research firm, increased the price target on Allegheny Technologies Incorporated (NYSE:ATI) shares from $80 to $81, while maintaining a "Buy" rating. The company, currently valued at $8.46 billion, has demonstrated strong market performance with a 45.83% return over the past year. Analysts at Benchmark cited the company’s continued benefit from a tight nickel alloy product market, which has been primarily driven by aftermarket Maintenance, Repair, and Overhaul (MRO) demand. They noted that ATI’s backlogs remain at record levels to this day.
Over the past two years, ATI has expanded its titanium melt capacity by 80%, taking advantage of customers diversifying away from Russian suppliers and preparing for the expected commercial aerospace Original Equipment Manufacturer (OEM) re-ramp, particularly for wide-body aircraft. According to InvestingPro analysis, the company maintains a strong financial health score of "GREAT," supported by a healthy current ratio of 2.44. Following Allegheny Technologies’ fourth-quarter 2024 earnings, the company adjusted its fiscal year 2025 guidance to the lower end of the long-term range, reflecting the impact of Boeing (NYSE:BA)’s strike.
Benchmark anticipates that ATI will continue to benefit from the record MRO backlogs throughout 2025, with the guidance for the year set at a level that could potentially be exceeded. Looking beyond the next year, the firm also believes that ATI’s titanium capacity investments will complete qualifications and that the commercial aerospace OEM re-ramp will take shape on a more solid foundation than in the previous two years. For deeper insights into ATI’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and 8 additional ProTips about the company’s performance.
The analyst pointed out that ATI’s nickel alloy vertical, which is currently benefiting from the MRO market, will transition to more OEM new aircraft build products. Additionally, ATI’s secondary markets within Defense and its expanded portfolio in near-aerospace metals, such as hafnium and zirconium for commercial nuclear applications, are experiencing growth driven by secular trends.
In conclusion, Benchmark’s revised price target reflects a forecasted enterprise value to EBITDA multiple of 12.8 times for fiscal year 2026, indicating their positive outlook on ATI’s future performance, supported by record MRO backlogs and growth opportunities in titanium capacity and exotic materials markets. While ATI currently trades above its InvestingPro Fair Value, the company maintains robust financials with annual revenue of $4.36 billion and a P/E ratio of 21.37.
In other recent news, Allegheny Technologies Incorporated (ATI) reported a robust fourth quarter, with adjusted earnings per share (EPS) of $0.79, surpassing the consensus estimate by $0.20, and a year-over-year revenue increase of 10% to $1.17 billion. Following this report, CFRA analyst Matthew Miller revised his financial outlook for ATI, raising the 12-month price target from $68.00 to $75.00 while maintaining a Buy rating. Miller’s revision is based on valuing ATI at an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 13.0 times his 2026 EBITDA estimate.
Despite a slight reduction in the 2025 EPS estimate, Miller has initiated a 2026 EPS forecast at $3.55. Notably, ATI’s fourth-quarter performance was boosted by a significant top-line beat of 9.7% and an expansion in adjusted EBITDA margin to 17.9%, up 280 basis points year-over-year. The company’s performance was largely driven by a surge in defense market sales and jet engine sales, both showing significant year-over-year growth.
Miller attributes ATI’s strong quarterly results to improvements in operational efficiency and anticipates further margin expansion in the coming years. He also highlights ATI’s strong balance sheet and robust liquidity, which he believes positions the company to capitalize on the ongoing normalization of the aerospace and defense supply chain. Looking ahead, Miller projects a 21.5% growth in EPS for 2025, followed by an increase of 18%-20% in 2026, reflecting confidence in ATI’s continued financial improvement and market positioning.
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